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5G use cases dominate the conversation at MWC - but who’ll get to monetise them?

04 April 2019

By Warren Tucker and Anita Nadkarni

We’ve spent fascinating and energising few days at MWC 2019 in Barcelona, which was packed with ground-breaking innovations and glimpses of the future. This is a short overview of what we saw and experienced during the week, particularly geared to non-telecoms industry folks, of whom there were many in attendance. Indeed it felt like the corporate or business to business (B2B) version of the Vegas Consumer Electronics Show (CES) earlier this year.

Sheer size and diversity

The 2,400 companies presenting innovations at MWC 2019 included not just telcos, but also tech giants, automotive manufacturers, leading industrial businesses, financial services, payments players, and many governmental organisations. They were all drawn to MWC by the explosive expansion now underway in the global ecosystem around mobile and connected devices. This ecosystem has a total value estimated at US$3.9 trillion, and includes 5.1 billion connections that link more than half of the world’s population to the internet. This reach means mobile’s impacts are enormous both economically and socially—and are continuing to grow.

5G getting practical

The next generation of mobile technology was once again a feature of the show. It promises speeds 100x faster, much greater capacity and lower latency (the time it takes for the network to respond to a request or transaction), while at the same time consuming much less power. These attributes make 5G suitable for a vast array of potential use cases—many of which were showcased at MWC 2019.

From smart city infrastructure solutions, drones to connected cars, and from connected oil & gas workers using augmented/virtual reality (AR/VR) to healthcare delivered in real time to patients in remote areas, we saw countless ways in which 5G will reinvent our personal and working lives in the future. It was also compelling to see robots advancing from artificial to emotional intelligence, practical here-and-now use cases such as intelligent device and consumer-specific controls and the deployment of small-form-factor network antennae that can significantly improve coverage in dense urban areas such as in a football stadium. Indeed, having attended several of the recent Six Nations rugby union matches, I found some of my picture messages required 3-4 attempts to send and I could forget about making a call!

However, as the future vision takes shape, a nagging and age-old question remains: who will make money from 5G networks? Telcos have struggled to capture the full value of their investment in 5G’s predecessor, 4G - with much of the value going to other players such as the over-the-top (OTT) content and service providers that we all know and love, and of course the device manufacturers who’ve been able to sell ever more expensive devices. Will this happen again with 5G?

With 5G business models continuing to evolve, this question is still being debated and clearly the telcos are striving to move fast(er) to carve out their role in the ecosystem. At MWC, we provided our own insights to help inform this debate through our thought leadership report —Making 5G pay. This maps out the different 5G monetisation models now emerging.

As with 4G, the telcos will have to be smart, they do not wish to become a pure transport pipe. To win, operators must: become world-class in creating ecosystem partnerships; build truly open, cloud-first IT & software defined network services (the tech is now mature); invest in real-time security; and gain increased capability in both analytics and mobile edge computing. As more and more data needs to be moved between things and consumers, businesses will be willing to pay premium on connectivity that incorporates these factors enabling them to move fast, be secure and have total control over services they consume and potentially re-sell.

In light of these factors, telcos burdened with 5G investment needs are rethinking the organisation of their infrastructure assets and monetising them. This comes down to a choice over which assets to retain and which to separate or divest. The dilemma is that divestment could provide much needed funding for new investments but may reduce operators’ control over high-dependency assets.

There is also the question of core-capability - in a software-defined world, the old approach of mass technology outsourcing that took place between 2000 and 2010 is now a problem, especially for telcos. Core skills, capability and expertise in technology is no longer a commodity in specific areas. Indeed, when a company manages this well, it can turn into a primary source of unique competitive differentiation. And that is tough to do if you’ve outsourced your tech skills. This is one of the many topics that raised as challenge by our clients at MWC, and one we are helping several players to re-balance.

Business to business - to anything!

Many different companies and industries are now coming together to realise a host of opportunities opened up by advances in technology. Examples demonstrated at MWC included automotive companies collaborating with many other sectors to turn the connected car into a hub for a vast range of services, from mobile payments to online shopping deliveries. Another was the combined use of real-time high-speed network connectivity and robotic power-assist gloves to enable a doctor to provide real-time physical diagnosis guiding a lower trained medical professional at the point of need, such as a road-side injury.

It is interesting to note that these use-cases and advances are frequently being pioneered by non-telco organisations. Building the capability to attract and win the attention of these organisations helping them move faster to market will need to be a key telco capability. Of course, this will also require innovation in commercial models, perhaps with the telcos taking a share of the improvement or the end-user service in collaboration with the customer - as opposed to simply selling connectivity services. The good news for telcos, is they frequently have capability in areas that these non-telco enterprises or other digital-native companies have limited interest in building themselves: security, service support, monitoring centres, supply chain management, billing and payments to name a few. We believe that the telcos that win in 5G will be world class at fostering and creating an open ecosystem of partners and driving increased innovation in commercial models between these players.

4th Industrial Revolution (4IR)

A further theme at MWC 2019 was applying connectivity and the Internet of Things to transform manufacturing operations. 5G’s combination of high speed and far lower latency and power consumption, together with greater reliability of connectivity, makes it ideally suited to act as an enabler for a new era in manufacturing control systems - since many small, low power devices can be embedded throughout an enterprise. Many leading manufacturers from across the world were at MWC to find out more about its potential, typically looking at situations that require real-time action and with the ability to embed data collection and AI to support faster decision-making to optimise production or predict expensive outages.

Impact on Society

Many of the intended benefits of 5G around healthcare, connected cars and smart cities are exciting; however, they remain some way off both from a regulatory perspective and of course, from widespread acceptance from society at large. At MWC, policy makers appreciated that to capture the benefits from technical advances, they must determine how much state intervention is required in accelerating the build out of higher-speed networks, safeguarding national security, ensuring markets remain competitive and dynamic, and protecting consumer rights and privacy in a world where the exploitation of personal consumer data has funded large-swathes of technology investment and advancement.

It was clear from MWC that the mobile industry is pivoting from serving its own expansion to enabling digitisation of society. It is also easy to overlook the wider societal benefits of connectivity. For example, smartphones and connectivity in underprivileged locations continues to increase bringing banking services, healthcare and trading benefits to many parts of the world, while reducing corruption. There are also many exciting IoT use cases involving satellite communications, including helping fisherman in Asia better plan their fishing rotations, thereby protecting fish stocks and increasing their yields. These lower-cost but high-impact solutions are encouraging. It was also refreshing to hear so many industry executives talk about their corporate purpose in enabling trust, privacy, security, sustainability, ethics and inclusion.

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